CNA Financial Corp. continued dismal third-quarter financial loss trends, reporting net income decreased 290 percent in the third quarter, and that it had secured a cash infusion of $1.25 billion from Lowes Corp.
The Chicago-based insurer reported third-quarter net income dropped $505 million from the comparative quarter to a loss of $331 million, translating into a loss per share of $1.23. The company reported revenues decreased 33 percent, or $825 million, to $1.66 billion in the period. The combined ratio in the quarter grew 3.6 points to 114.1.
For the first nine months, net income dropped 95 percent, or $650 million, to $37 million, or 14 cents a share. Revenues for the period compared to last year dropped 16 percent, or $1.2 billion, to $6.3 billion. The nine-month combined ratio increased 3.6 points to 110.3.
The third-quarter results were affected by $168 million in after-tax catastrophe losses. The quarter also included a number of investment loss items, with an increase in net realized investment losses of $385 million from the prior year.
CNA said it would issue $1.25 billion of preferred stock to the Loews Corp., with a dividend rate of 10 percent for the first five years, of which $1 billion will be used to support statutory capital. The remaining $250 million will go to the holding company to support financial flexiblity. Because of this, the company is suspending dividend payments on common stock until the preferred is paid in full.
During an analyst's conference call, Stephen W. Lilienthal, chairman and chief executive officer, said the move was made to position CNA to withstand the current financial stress the markets are suffering.
Mr. Lilienthal also announced that Thomas F. Motamed will take over his position upon his retirement on Jan. 1.
Late today, insurance rating service A.M. Best said the "A" insurance financial strength rating on CNA would remain unchanged.
(This story was updated at 4:57 p.m.)